Jun 10, 2007

U.S. Senator Hillary Rodham Clinton pledged to push for federal help with the costly burden of retiree health care if the struggling U.S. auto industry accepts tougher fuel economy standards.

"I know we have to do more to support the American auto industry and to support the American auto worker," she said.

Hmmm. Sounds nice, but given the fact that she was speaking to an audience filled with UAW employees and their families, it is clear she was playing to the crowd.

One would think that American automakers would notice, oh, THE PRICES AT THE PUMP and recognize that it is time to start cranking out smaller cars with better fuel efficiency. Sure, there are still consumers for whom $3.00 per gallon gasoline is no deterrent to purchasing a Hummer, but for most of us the idea of a 50-MPG vehicle sounds pretty appealing right about now.

And with the Chinese and Indian economies growing at double-digit rates, the global demand for oil will likely keep upward pressure on gasoline prices.

Clinton's feel-good speech is in sharp contrast with the pointed comments of presidential competitor Barack Obama, who criticized U.S. automakers for falling behind foreign competitors on the production of fuel-efficient vehicles.

Barack Obama was right, but this is an election year. Politicians are not supposed to tell the truth in an election year, Senator Obama. They are expected to commit the beleaguered federal treasury to thousands of expensive projects that are aimed at specific voter demographics.

Sheesh. Someone needs to tell Obama how the game is played.

The larger issue, of course, is that American maunfacturing facilities continue to become less competitive with competitors in places like China and Malaysia. Globalization is driving down the standard of living for many Americans and western Europeans, and we are in a race to the bottom with workers in developing nations. By 2050 most of the world's population will likely be making the equivalent of today's $6.00 per hour job, with few benefits and little in the way of a social safety net.

And me? If I happen by some miracle to make it to see the year 2050, I will probably be destitute and living on the generosity of family members. As it stands I expect that I will need to work until I am 80 to make ends meet if I am to have ten years watching the sun set over the shuffleboard court at Golden Acres.

The millions of American autoworkers who expect that there will be much of a retirement waiting for them are in for a rude awakening. I anticipate that within ten years there will be massive defaults on retirement obligations by U.S. automakers, and that at least one of the Big Three will cease to exist.

Now: go back to your happy Sunday and listen to the presidential hopefuls vow to provide you with all sorts of goodies. Senator Clinton and her presidential competitors will make you feel better, just you wait.

8 comments:

Globalization is driving down the standard of living for many Americans and western EuropeansReally? Let's take a nice medium middle-class salary, say $40k/yr, and use inflationary adjustments to give the equivalent salary in, say, 1987, and compare how much you can buy in 1987 with that.

Home ownership is at record highs, 98% of people have TVs, more than half have a computer with internet access, all those HDTVs keep flying off the shelves at Best Buy, and Americans are getting fatter by the day instead of starving...there might be some people hurt by globalization, but I don't know that it's as many as you seem to be suggesting (and frankly, the cheaper prices of most goods seem to have offset the lower wages here in America).

Screaming nutcase, even if all of your statistics are true, there is still another problem with your reasoning:

None of the things you mentioned are good indicators of the economy. I believe Mike just made a post on credit debt. Respectfully, all of the indicators you used to monitor America's wealth could also be indicators of record credit debt, something that few people deny, instead of record wealth.

The standard of living most likely is decreasing for Americans; they're just learning to hide it better as credit debt spirals out of control. If anything, I think there is a definite growing gap between the rich and the poor that gets covered behind statistics like the ones you just mentioned.

Then again, that is an entirely different problem for an entirely different day.

2. The percentage of total income garnered by the top 20 percent of American households jumped from 43.6% in 1967 to 50.1% in 2005, while the bottom quintiles (lowest 80 percent of households) each saw a decline in percentage of total income.

4. I would not get too excited about home ownership rates, which have risen from 63.4% in 1965 to 68.9% in 2006. This reflects a very advantageous mortgage interest deduction (good news) while also recognizing the usurious effects of the sub-prime lending market (bad news).

I think I'll have to wait until after my Statistics class (2009, don't hold your breath) before I can properly compute the many different numbers involved; however, I recommend this site.

Use Find to get you to "Abuse of Wealth" and scroll down a little to the graphics. Compare the Median Income chart to your figures. The math aspect is up to you, but the doom-and-gloom predictions are pretty similar. (That particular label is not to suggest you're wrong, but to acknowledge the consequences of what you're predicting.)

I know Dan pretty well, and his research tends towards the aggressively thorough side of things. I thought it might interest you.

Homeownership is at record highs, but the numbers on foreclosures aren't prettier and are getting uglier still. More and more people are living off of debt, just like Bush told them to, and when that debt finally catches up to them...they stumble, they fall, and the effects ripple out to those around them.

But, go ahead, keep your head in the sand: All is well, nothing to see hear, move along, move along...